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“After the biggest tax-raising budget in over 20 years, there is at least some good news today with the announcement that the Bank of England will cut interest rates. While this looks like a lack of co-ordination between the Government and the Bank of England, it should lead to lower borrowing costs for most people.

“And given that inflation is now below the target rate of 2%, there is optimism that today’s announcement will be followed by another cut in interest rates next month.

“However, it is impossible to ignore the wider context in which today’s announcement has been made: the election of Donald Trump. There are two very clear messages that emerge from his campaign.

“The first is that the economy matters in politics. There have been many references to Ronald Reagan’s quip “Are you better off now than you were four years ago?” to explain Trump’s success.

“The Office of Budget Responsibility’s report which accompanied the Budget Statement predicted that household incomes will fall between 2025 and 2028. After a couple of years of rising incomes, the cost-of-living crisis will return next year.

“The second message from the US election is Trump’s threat to impose tariffs. The National Institute of Economic and Social Research recently said that the tariffs would have a major impact on the UK, halving economic growth, raising inflation by 3-4 points and raising interest rates by 2-3 points.

“As an economy that sits outside the EU and relies on trade with the rest of the world, it would be one of the worst affected by Trump’s tariffs. This will only make the impending cost-of-living crisis worse for the British people.

“Given that the future is now more uncertain, and households will again be made to pay the price, it is time for the Government’s fiscal policy and the Bank of England’s monetary policy to be better coordinated. If not, we may be referencing Ronald Reagan after the next general election.”